Financial Stability Authority to collect EUR 235 million in EU ex-ante contributions from credit institutions
Updated 7.5.2020 and 28.5.2020
The Single Resolution Board (SRB) has calculated the amounts of EU ex-ante contributions for 2020. The total ex-ante contributions to be collected from all 3,066 obliged institutions in the euro area amount to approximately EUR 9.1 billion. The Financial Stability Authority (FFSA) has submitted the SRB’s decisions on EU ex-ante contributions to Finnish credit institutions and, by decisions made by it on 29 April, ordered the contributions payable by the end of May.
This year, the FFSA collects a total of EUR 235 million (the amount has been refined 22.5.2020) from Finnish institutions to the Single Resolution Fund (SRF). The contributions payable by Finnish institutions represent an average growth of 30% from the previous year. In 2019, the FFSA collected a total of approximately EUR 216 billion in EU ex-ante contributions from Finnish credit institutions, including a EUR 35 million partial contribution of a single credit institution for 2018.
The ex-ante contributions are based on the EU’s Resolution Regulation, Intergovernmental agreement on stability contributions and a Commission Regulation supplementing them. In accordance with the SRM Regulation (EU 2014/806), the target level of the SRF in 2023 is at least 1% of the amount of covered deposits of credit institutions authorised in all participating Member States. The target level of the SRF based on current information is approximately EUR 60 billion, and after this year some EUR 42 billion has been collected into the fund.
The sum collected annually as ex-ante contributions from the banking union area as a whole is determined based on the aggregate amount of covered deposits held by institutions operating in the area as well as their estimated development. Covered deposits have grown in recent years, and the SRB has assessed that the growth will continue during the transition period. Therefore, the SRB has decided to apply a level of 1.25% of covered deposits in the calculation of 2020 contributions in order to ensure achievement of the target level within the prescribed time. The factor used in the determination of the target level is higher than last year (1.15), which is part of the reason for the higher ex-ante contributions.
Furthermore, the amount of EU ex-ante contributions payable by Finnish credit institutions in 2020 is materially affected by the full inclusion of Nordea Bank Plc's covered deposits in the calculation. This increases the total amount of covered deposits within the scope of the Finnish deposit guarantee scheme and the balance-sheet-based size of the institutions. In determining the EU ex-ante contributions for 2019, only one quarter of Nordea's covered deposits were taken into account, since Nordea was re-domiciled to Finland in October 2018.
On an institution-specific-basis, changes in the indicators describing the risk exposure have an impact on the amount of the EU ex-ante contributions. The number of credit institutions operating in the Finnish banking sector is relatively low. Therefore, a change in an individual credit institution's indicator affects the EU ex-ante contribution of the institution concerned, but it may also have a major impact on the relative risk exposure of other credit institutions operating in Finland. Therefore, the ex-ante contributions imposed on certain credit institutions decreased slightly, whereas for the most institutions, they increased, even up to 65−85%.
The calculation basis for the EU ex-ante contributions until 2022 has two parts. It consists of the calculation of the share of the national credit institution sector (BRRD share) and the common share of all credit institutions within the banking union (SRM share). Hence, when assessing developments in EU ex-ante contributions, attention must be paid to developments in the size and degree of risk of the institution as well as in the credit institution sector both in Finland and in the banking union. In the calculation of the EU ex-ante contributions for 2020, the BRRD share is 20%, as opposed to 27% in the 2019 calculation. Correspondingly, the SRM share rises from 73 to 80%. This change reduces the impacts of the structure of the Finnish banking sector and its changes on EU ex-ante contributions.
In addition to the EU ex-ante contributions, the FFSA also collects contributions to the national resolution fund of approximately EUR 17 000 from certain investment firms. The target level for the national resolution fund to be achieved by 2024 is approximately EUR 150 000.
On 27.5.2020 the SRB published information on ex-ante contributions for 2020 (based on decisions made on 15.4.2020) on its website. In addition to the fact sheet, Q&A and additional information on the calculation methodology, there is statistical information on ex-ante contributions by country.
For further information, please contact Kristiina Tuomikoski, Resolution Expert ([email protected])